According to a recent study by Gartner-Dataquest, the economic downturn held down the network and systems management (NSM) software market in 2001, as the NSM industry shrank 5% in 2001, compared to 7% growth in 2000.
New license revenue in 2001 was $6.9 billion, and IBM was the only one of the top four vendors - BMC Software, Computer Associates, Hewlett-Packard and IBM - to see growth.
Gartner says IBM grew by starting to offer management for mainframe database management systems (DBMS). But IBM's Tivoli division, which develops and distributes the company's NSM software, contracted in 2001.
The Gartner study showed that CA held 6.8% of the NSM market in 2001, while BMC jumped ahead with 8% and IBM led the group with 18.8%.
BMC dropped 26% in new license revenue, but still managed to get ahead of CA, which saw new license revenue drop 76%. HP, which spent most of last year acquiring Compaq, lost 15% with its OpenView software portfolio and placed fourth among the top 10 NSM vendors in 2001.
The vendor most affected by the year's economics seems to be CA. The company changed its revenue accounting practices, which may have caused the company's revenue drop from 2000 to 2001.
Glenn O'Donnell, program director of service management strategies at Meta Group, says the big four vendors have definitely lost market share to some smaller players, yet the companies still enjoy customer loyalty.
"It's interesting to note that the big four are enjoying some customer flight to stability. OpenView customers may prefer other vendors' technology and features, but they know HP will be there to support them in the future," O'Donnell says. He adds that the market share losses have prompted Tivoli and CA to significantly step up their customer service efforts. "Each has had some success at this. I expect HP and BMC to follow suit."
Despite the overall loss in the sector, companies such as Quest, NetIQ, Swan, OPNET, Motive and Supportsoft each grew more than 20% in 2001, according to Gartner. Peregrine also climbed the ranks to number five last year, which Gartner attributes to the company's acquisition of its chief competitor, Remedy.
The focus for NSM vendors has also shifted a bit, according to this study. IBM's newest endeavor, DBMS management, grew 14% in 2001, and IT asset management grew 25%. Job scheduling software also experienced a 5% uptick. The largest segment in terms of license revenue, availability and performance management software, dropped 7%, while network management fell 12% and service management experienced a 25% loss.
In its "NSM Top 10 Shakeup: Lowered Expectations for all" report, Gartner advises vendors position product messages for users that are "risk-averse and looking to make evolutionary rather than revolutionary business improvements." Gartner also says vendors need to be able to demonstrate how their products make incremental improvements that hold down headcount, lower skill requirements or "get more of the existing equipment, software and people already on hand."
Lastly, NSM vendors must emphasize products that help their customers cut costs directly related to the bottom line. Gartner says cost-cutting claims will appeal more to customers than products claiming to increase revenue.
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